"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Monday, January 06, 2014

Slumlording isn't always so simple

Right: A house being rehabilitated in Detroit by DIY Network's Nicole Curtis. Caption: Curtis also bought the charred remains and lot of the house next door to the house on Campbell Street. It was destroyed in a fire. It took two days with a Bobcat to clear the lot, Curtis said on Facebook. "We were here for a week and half outside before we ever made it inside," says Sykes. (Nicole Curtis/Facebook)

There is coverage about an activist's campaign in Baltimore to call attention to vacant, abandoned, and poorly maintained buildings in the city--focused mostly on residential properties. See "Foes of Urban Blight Take Aim at Landlords" from the Wall Street Journal.

Not that I want to defend a slumlord (and I have accused people of being such from time to time when they deserve to be so labeled), but as discussed in the entry on "abandominiums" in Anacostia DC ("Deeper Thinking, Programming Needed for Weak Residential Markets") property abandonment is most often the result of it being more expensive to maintain a property than it yields in rental income or the problems in successfully renting and managing the property exceed the skills, time, and financial capacity of the owner.

This is an especial problem in weak real estate markets and submarkets, with more supply of potential housing than there is demand.

I have discussed from time to time the book Building neighborhood confidence: A humanistic strategy for urban housing by Rolf Goetze, which was published in the mid-1970s, to which I was introduced in 2003. Goetze was the director of research for the Boston Redevelopment Authority, and the basic point that he makes--discussing all these issues in far greater detail than I--that in such situations the government can and should step in and help in rebuilding confidence in a neighborhood through a property improvement strategy, but that the point of the investment is to rebuild the confidence of property owners in the neighborhood and in investing on their own, that the point isn't to create dependence, but to provide the necessary support.

In cities like Baltimore or Detroit or Cleveland or St. Louis with tens of thousands of vacant buildings typically the city is so overwhelmed by the problem that it is unable to focus on the hard reality of addressing nuisance and vacant properties one site at a time.

This piece suggests creating neighborhood by neighborhood plans with detailed inventories of properties and thumbnail strategies and tactics for addressing the problems.

But the biggest problem is lack of demand and the reality that the cost of rehabilitating a property is far greater than the market value of residential properties in the area.

I am not saying don't fix the properties, just that yelling at someone that they are a slumlord ends up not helping very much.

And because "used houses" sell for so cheap, it's too expensive to build new single family housing for sale to owner-occupants, because the cost of new construction is greater than the cost to buy existing housing--and so properties won't appraise at the price necessary to get a conventional mortgage.

This is why to right the markets in such neighborhoods, public sector intervention is usually required. At the same time, it's difficult for the public sector to choose winners and losers--saying that there are only so many resources to go around and that it's best to focus on neighborhoods with greater potential for improvement--so usually money is spread around to multiple neighborhoods but not at the level necessary to bring about critical mass improvement.

That being said, the neighborhood that Nicole Curtis picked does seem to be reasonably stable as opposed to many other Detroit neighborhoods, so that the project won't go for nought.

2 Comments:

I think the market forces in such situations are rather interesting and can provide some better insight into just what causes problems in these neighborhoods to begin with.

Namely, it seems that it's simply not profitable to redevelop any land/neighborhood/street/whatever to the same level of intensity it had before. The initial buy-in is just too high, even in very depressed neighborhoods, to overcome construction and renovation costs. Without higher density and more units to spread the costs around, then the only other options are to go very high-end, or the neighborhood stagnates and eventually dies.

Of course there are supply and demand issues here, especially when there are other factors involved like crime, schools, transit access, etc., but historically all neighborhoods could and did mature and densify over time. Modern zoning and a reliance on automobile-based transportation has crippled this process and left a lot of problems in its wake.

Some places can build to the point where they can build to previously high levels, or even to build beyond that level because of how the housing market is structured today--preferences for different types of housing for different types of households whereas most single family housing presumes it is being constructed to accommodate multiple children, two adults, etc.

But it's not gonna mean single family housing because of the cost and availability of land, it's going to be multifamily or townhouse, and depending on the market, the lots might be house-only.

But yes, starting out in depressed neighborhoods requires huge subsidies, and the process takes a long long time and may never be truly successful.

DC has benefited from some extraordinary circumstances, that makes revitalization of many neighborhoods possible.

So you are absolutely right that for most places, it's almost impossible for new development on a larger scale to succeed.

In DC, the thing is that until most of the opportunities in the more preferred areas are consumed, depressed submarkets won't experience a lot of the repricing necessary to push revitalization energy forward.

The H St. neighborhood was like that for decades. Same with Logan Circle even. 15 years ago, having lots of multiunit housing buildings on 14th St. was unimaginable. etc.

About Me

I am an urban/commercial district revitalization and transportation/mobility advocate and consultant and a principal in BicyclePASS, a bicycle facilities systems integration firm, based in Washington, DC. Urban economic competitiveness is dependent on efficient transit and mixed use, compact places. Therefore, I end up writing mostly about mobility and urban design. While I am based in and write about Washington, DC issues, I try to write so that "universal lessons" are evident in the entries.